Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated 2021 second quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Nick Zangari, Vice President, Treasury and Investor Relations. Thank you, Katrina. Good morning. Welcome to our second quarter 2021 earnings conference call. After the company's prepared remarks, we will open the call for your questions. The company's 2021 second quarter business results were released yesterday afternoon. A copy of this release announcing results and other financial and statistical information about the period to be presented in this conference call, including information required by Regulation G, is available at the section of the company's website titled News, located at churchilldownsincorporated.com, as well as in the website's investor section. Before we get started, I would like to remind you that some of the statements that we make today may include forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC, specifically the most recent report on Form 10-Q and Form 10-K. Any forward-looking statements that we make are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The press release and Form 10-Q are available on our website at churchilldownsincorporated.com. Now I'll turn the call over to our Chief Executive Officer, Mr. Bill Carstanjen. Thanks, Nick. Good morning, everyone. With me today are several members of our team, including Bill Mudd, our President and Chief Operating Officer, Marcia Dall, our Chief Financial Officer, and Brad Blackwell, our General Counsel. I will provide brief comments on our second quarter performance. Then I will share some updates on our capital investment plans for Churchill Downs, Derby City Gaming, and our other growth initiatives. After my comments, Marcia will provide more detail on our second quarter performance. We will open up the call for questions. Regarding our second quarter results, overall, we delivered the highest net revenue and highest adjusted EBITDA for the second quarter that we have ever generated in any quarter in the history of our company, despite running the 147th Kentucky Derby and operating our gaming properties with a variety of COVID-19-related restrictions. We were very pleased with the overall results of the Kentucky Derby, which we ran under significant state-mandated capacity restrictions. Instead of our typical 150,000 fans-170,000 fans, we welcomed approximately 52,000 back to Churchill Downs Racetrack. At the time of its running on the first Saturday in May, our event represented the largest number of fans to attend a sporting event in the U.S. in 2021. As you saw in the press release that we issued after the Derby, wagering from all sources on the Derby Day program was up 85% to $233 million, and on the Derby race itself was up 96% to $155 million compared to 2020. This was not quite back to the previous record set in 2019, but was very close and still represents the second-best all sources wagering numbers of all time. Given the capacity restrictions at Churchill Downs Racetrack and at brick-and-mortar facilities across the country, we were very, very pleased with that. TwinSpires generated record handle of nearly $63 million on the Derby Day program, up 66% over 2020, and record handle of nearly $41 million on the Derby race alone, up 75%. To put this in further perspective, TwinSpires handle on the Derby Day program was up 29%, and handle on the Derby race itself was up 35% compared to the previous records set in 2019. We are grateful to our sponsors of the Derby who remain so committed to the event throughout the pandemic, as well as our NBC partners. We, along with NBC, were extremely pleased with this year's nearly 16 million average viewers, marking a 54% increase over the 2020 Kentucky Derby. Up through the date of the Derby, the television audience topped all entertainment award shows for the first time ever and marked NBC's most-watched broadcast since the NFL Divisional playoffs in January. As we look towards the 148th Kentucky Derby in 2022, we see extremely strong ticketing demand, and with the projects we will touch on shortly, feel a great deal of optimism for the future of this iconic event. Our HRM facilities in Kentucky performed very well in the second quarter, with Derby City Gaming delivering record net revenue, record adjusted EBITDA, and record margin. Our Oak Grove HRM facility also performed very well in the second quarter. The team opened the Amphitheater and Equestrian Center, delivered strong double-digit sequential growth in net revenue and adjusted EBITDA, and expanded margins, all records for the quarter. Regarding our Newport racing and gaming facility, we decided to create two distinct areas within the facility. The new area will be designated smoking, and the existing area will remain smoke-free. We plan to build a Newport gaming facility for approximately $38 million and came in under budget. We are utilizing the remaining capital we had not previously spent to lease and finish out nearly 13,000 sq ft next to the existing gaming floor. We are relocating 150 of the existing HRMs into the new smoking area to create a more spacious environment, and we are also adding a new bar area. This lease expansion also provides additional parking and improves our outdoor signage. We expect to have the project completed in late November of this year. The success of our HRM facilities in Kentucky reflects our ability to develop innovative new products through industry partnerships, invest capital wisely, and build customer demand for a unique entertainment offering. The addition of HRM game titles and cabinets from Aristocrat, IGT, Scientific Games, and Konami will enhance our customers' entertainment experience beyond our strong original offering of Ainsworth titles. Equally importantly, we have generated a significant increase in purse money to attract more and better quality horses to Churchill Downs Racetrack, as well as to our other racetracks, which help strengthen the foundation of the entire horse industry in Kentucky. Regarding our TwinSpires horse racing business, as I mentioned earlier, we benefited from the return of the Kentucky Derby to the first Saturday in May, in contrast to last year when the Kentucky Derby was delayed until September. As a reminder, the majority of our annual marketing budget for TwinSpires is always spent around the Derby. Derby week enables us to inexpensively acquire a significant number of new customers, driving down our Cost Per Install, which is a key metric for us. This year, Derby week set many all-time records for TwinSpires horse racing, with a record number of unique players and a record number of first-time depositors compared to last year's pandemic year, when there was little opportunity to access the Derby other than online. User acquisition and CRM spending is a drag on our second quarter EBITDA because we cannot recapture all of the spend in the same quarter. We should recover the spending over the next three quarters, which is less than a one-year payback on the investment. It is actually very encouraging that we are able to deploy more user acquisition and CRM dollars than ever before during this year's Derby week. We spent $7 million more than last year, $3 million more than second quarter of 2019. This spend grew our customer base, which we believe will fuel our growth in the future. Given the second quarter of last year was in the heart of the pandemic and the Derby had to be moved to September, comparisons to second quarter this year can get confusing. It's clearer when we compare this year's second quarter to 2019. Revenues for TwinSpires horse racing were up 33%, adjusted EBITDA was up 42% over 2019. Regarding our TwinSpires sports and casino business, we launched our app under the TwinSpires brand in Colorado, Pennsylvania, and Indiana during the second quarter, following a launch in Michigan and Tennessee in the first quarter. Given the additional marketing spend to support the launch of our apps in these states, we had a net loss of adjusted EBITDA of $11 million in the quarter for this business. We remain careful and patient in our ongoing build-out, and we hope you recognize as long-term investors that the disciplined approach we are taking today will pay off. We will efficiently expand our footprint and grow the business slowly over time with disciplined acquisition and marketing spend, which will enable us to maximize the potential value of this business in the long term. Even though football season is approaching, depending on the pace of final regulations, we may see launches in a couple of new jurisdictions like Louisiana and Maryland. We believe the loss in this business in the second half of the year will be similar to the first half. Turning to our gaming segment. Our gaming segment delivered all-time record levels of net revenue and adjusted EBITDA. Our wholly owned gaming properties continue to generate high margins coming out of the pandemic, including nearly four percentage points of sequential margin expansion and over 10 percentage points of margin expansion compared to the same quarter of 2019. We are pleased with our regional gaming properties' performance, and we believe we can maintain these higher levels of margins for the foreseeable future. Our equity investments in Rivers Casino and Miami Valley Gaming also performed quite well in the quarter compared to the prior periods and reflected the exceptional locations of these facilities in large markets. Both properties delivered all-time records for net revenue, adjusted EBITDA, and margins. Across our segments, the key to delivering these results center around our continued long-term strategic focus on growth, our focus on building and acquiring high-quality properties, making smart capital investments in our existing properties, careful planning regarding our balance sheet, and the quality and focus of our operational leadership teams. Our company has a track record of delivering long-term total shareholder return and exceptional organic growth opportunities. We have a unique set of assets in each of our segments that we believe will continue to fuel strong growth in the coming years. There are three groups of capital investment projects that will further transform our company over the next five years. The first set of projects involves the multi-year expansion at Churchill Downs Racetrack to provide once-in-a-lifetime experiences for our guests as we approach the 150th running of the Kentucky Derby in 2024. We are excited to announce three new multi-year projects that we believe will generate consistent adjusted EBITDA growth with nominal levels of risk. The first project is the Homestretch Club. We plan to invest approximately $45 million to transform the section of the grandstand area that is adjacent to the Winner's Circle Suites and below the Jockey Club Suites. This area includes the bleacher seating that is adjacent to the track rail. Guests who are in these dated first and second-floor bleachers previously had access to very old first-floor concourse area under the Jockey Club Suites that is not air-conditioned and has limited amenities. Based on feedback from our customers, we have reimagined this section to create several new reserved seating products. This area offers a wonderful view of the starting gate for the Derby, a superior view of the track's big board, and of course, a bird's-eye view of the home stretch as the horses thunder to the finish line. We will also transform the former first-floor concourse into a special hospitality club that will create an air-conditioned space for guests to gather in between races to place a bet, enjoy the all-inclusive food and beverage offerings, or enjoy other high-end amenities and activities. The outdoor portion of this project, replacing the bleachers, will include several new premium seating offerings for approximately 3,500 guests. These will consist of track-side lounges that are adjacent to the track rail and will provide a courtside seat experience, terraced dining tables that will offer covered outdoor dining positioned close to the racetrack, stadium-style cushioned seating, and private hospitality rooms that are available as an upgrade for guests seated in any of these new areas. While the total number of seated patrons will decrease from 5,200 in the current configuration to 3,500, in this case, less is more. The significant improvement in amenities will drive commensurate increases in ticket prices. Displaced customers who do not wish to upgrade will have other options, including what I will outline in a moment. We anticipate that the Homestretch Club will be completed in time for the May 2022 Derby. The second multi-year capital project is the Turn 1 seating expansion. In past years, we have built a temporary structure on the first turn at the track that accommodated 3,400 guests. This area has historically been a customer favorite, as it offered an introductory price point and includes great views of the first turn and the big board. Our Turn 1 seating expansion project will replace these 3,400 seats with 7,100 new permanent seats for a total investment of approximately $90 million. This new area will create two distinct ticket offerings for our guests. The first area will add 2,000 new premium dining seats inside a new 50,000 sq ft first-floor hospitality venue. This area will provide a slew of upgraded amenities for these guests, who will also have access to a reserved track-side terrace on the track rail to view the races and other signature moments throughout the day, including watching the horses walk over to the starting gate for the Derby. This project will also add covered stadium seating for 5,100 guests who will have access to all-inclusive food and beverage offerings on two new elevated concourses built behind the new stadium seating sections. This project will take longer to complete than the Homestretch Club, and we are therefore planning to have this open by the May 2023 Derby. Both the Homestretch Club and the Turn 1 project will offer personal seat licenses. There will also be opportunities for sponsor naming rights, partner activation footprints, and special event sales to generate additional revenue over the long term. The combination of these two capital projects will result in a net addition of 1,750 high-end reserve seats, and more importantly, due to the conversion to all-inclusive premium seating, we believe that net revenue for these two areas combined will be substantially higher than it has been in recent years. The third multi-year project involves an expansive redesign of the Paddock area, including the areas underneath and adjacent to the historic TwinSpires. In addition to introducing new and innovative seating experiences, this project will reduce congestion by significantly improving the flow of guests through the Paddock and plaza areas. We are so excited about this project because it will enhance the overall experience for nearly every guest who comes to our racetrack. We are still in the early design phase of this project, which we are tentatively planning to debut for the 150th anniversary of the Kentucky Derby in May 2024. We will provide updates on this project on our earnings calls going forward. One last note on Churchill Downs Racetrack. Our new turf course is on target for completion later this year. The new turf course will have a wider running surface, greatly increase the durability of the racecourse, and improve the safety for our equine athletes and jockeys. In general, turf racing generates more wagering per race, and we should get more races and a better quality, more predictable surface with our new addition. Our $10 million investment is a further indication of our confidence in our racing and wagering product and an investment in the growth of the Kentucky Derby. Second group of capital projects are the organic investments we are making in new high-growth historical racing and gaming entertainment properties. Our commitment to being disciplined and growing profitable businesses is reflected in our organic investment in these entertainment venues. We have five unique HRM growth opportunities that are underway, including expanding our Derby City Gaming property, developing another HRM facility in Louisville, executing the growth plans at our Oak Grove property, building out the HRM facility at Turfway Park and expanding our OTB network in Louisiana to include HRMs. Regarding our Derby City Gaming property, we continue to be very pleased with the growth of this venue and believe that additional expansion and other amenities will further enhance its long-term growth potential. We will be investing approximately $76 million to expand the property, including the addition of a five-story, 123-room hotel. The project will add 41,000 sq ft of new gaming floor space and will initially accommodate 200 new HRM game positions, a new VIP gaming space, and a new sports bar and stage for live entertainment. This area will also include a new restaurant and bar that will provide a variety of food and beverage options for gaming and hotel guests throughout the entire day in order to better serve and attract guests. It's clear that Derby City is working, and we will invest where things are going well. Our Oak Grove HRM and hotel venue is still in the very early stages of maturity and should provide ongoing growth as we expand our marketing to draw more customers. We estimate that we are less than 15% penetrated in the Nashville market, and our Win Per Unit Per Day is already exceeding our expectations for this early in its maturation cycle. We believe there is significantly more opportunity for growth from this property. We are also working on an HRM annex facility in connection with our Churchill Downs racetrack license that will add additional HRM gaming positions in the Louisville market. We are not yet ready to announce the specific location of this facility, but we confirm that it will not be at the racetrack itself and will be designed to capture more of the downtown and tourist market. We will share more details over the coming weeks as our plans are finalized. We think now is a great time to invest in our hometown, and that it will be a win-win for our community and Churchill Downs. Our investment and build-out of our Turfway Park racing and HRM entertainment venue is continuing, and we are on track to open the facility in the summer of 2022. Finally, we are very pleased that the Louisiana State Legislature passed a bill in the second quarter that has been signed by the governor, providing for the introduction of HRMs in Louisiana. The bill specifically allows fairgrounds to have up to 50 HRMs in each of our off-track betting locations. We are currently operating 15 off-track betting locations in Louisiana, most with video poker machines, and are developing plans to incorporate up to 50 HRMs in each of these facilities. We expect to spend approximately $35 million upgrading our OTBs and expect to have HRMs operational starting next year. The regulators are working on the necessary regulations. We will provide an update on our progress on our next earnings call. The third group of capital projects relates to our gaming properties. The most significant project in this group is the Rivers expansion. As we discussed last quarter, Rivers' $87 million expansion plan is on track for a phased opening starting in the first quarter of 2022. The Rivers expansion will accommodate approximately 725 gaming positions based on a combination of new slots and table games, and the facility will be the first in the state to have the maximum number of 2,000 positions. The first-floor expansion will host a great new gaming area, a new restaurant, and a new event center. The second-floor expansion will include a new gaming area and a new poker area. Collectively, these capital investment projects are the building blocks that we believe will propel strong revenue and adjusted EBITDA growth over the next five years. These building blocks are real, and they're tangible. We continue to have a very strong balance sheet available with significant cash and liquidity. With the near-term opportunity to monetize two significant properties, Arlington Park and the excess land at our Calder property, we are very excited. Regarding Arlington Park, we have received numerous bids from interested parties for the land and are working through the process to select the final winning bid. We will provide an update when we have selected the winning bidder. Regarding Calder, we have launched the process to sell the excess land around our Calder Casino. We've already received multiple unsolicited bids but expect it will take some time to run the formal process. We will provide an update when appropriate but are moving with all deliberate speed. In summary, the strong free cash flow of our businesses, with the potential to monetize underutilized assets, enables us to maintain low leverage, invest in organic and inorganic growth opportunities, pay increasing levels of dividends, and strategically repurchase shares over the long term for our shareholders. As we discussed, we have a lot of opportunities that are in the execution phase, and we have the capacity to land more projects as they develop. We think the horizon has never looked brighter for us. With that, I will turn the call over to Marcia, and when she is finished, we will open up the call for questions. Marcia? Thanks, Bill, and good morning, everyone. I will begin with some insights into our second quarter financial results, and then I will provide an update on our capital management plans. We are very pleased with our second quarter financial results and with the growth plans that are underway to transform our company and fuel strong growth in the coming years. Our team delivered record net revenue and record adjusted EBITDA on a consolidated basis in the second quarter. More importantly, our team is on track to deliver the highest level of net revenue and the highest level of adjusted EBITDA for the total year that our company has ever generated. Turning to our three business segments, our live and historical racing segment generated $191 million of net revenue and $98 million of adjusted EBITDA in the second quarter. Our Churchill Downs team ran a successful 147th Kentucky Oaks and Derby despite capacity restrictions which limited reserved seating. We appreciate all the fans that wagered on the races that week, and the support of our sponsors as well as NBC. Although ticketing revenue for Derby week is the primary driver of our net revenue and adjusted EBITDA, wagering, expansion of sponsorships, and the broadcast rights for the Derby are also important components of our adjusted EBITDA growth. The three new multi-year projects at Churchill Downs racetrack will significantly improve the existing venue, upgrade amenities, and provide a unique, all-inclusive experience for our guests, all of which will drive increased pricing. The Homestretch Club and Turn 1 expansion projects will add 1,750 premium reserve seats by May 2023 and will include additional personal seat licenses, allowing us to further segment our ticket pricing. These new areas will also provide the opportunity to expand our sponsorships in the coming years. The Paddock project will also improve and elevate the experience for all of our patrons. I'm personally very excited for the transformation that will occur over the next three years at Churchill Downs Racetrack as we prepare for the 150th running of the Kentucky Derby in May 2024. These three multi-year projects are a very capital-efficient way for us to expand this iconic asset and to create strong long-term shareholder returns. Turning to our HRM properties in the segment. Nearly a third of the $95 million of growth and adjusted EBITDA from this segment was driven by our Derby City Gaming and Oak Grove HRM properties in Kentucky. Derby City Gaming's performance continues to exceed our expectations, delivering record net revenue, adjusted EBITDA, and margins for the second quarter. The continued strong performance at Derby City Gaming clearly supports the business case for expansion of this property in the coming year. This was only the third full quarter that Oak Grove has been in operation, and the property is performing ahead of our expectations. We believe Oak Grove will deliver strong growth and adjusted EBITDA as we expand our market reach within the Nashville communities. Turning to our TwinSpires segment, adjusted EBITDA for the quarter from our TwinSpires horse racing business declined $8 million compared to second quarter last year. The majority of this decline is related to the timing of user acquisition spending and bonuses for existing customers. We spend more on customer acquisition around Derby Week than any other time of the year because TwinSpires is able to market more efficiently during Derby Week, and as a result, we are able to significantly reduce the cost of acquisition of a large cohort of people who like to wager on horse racing. We were able to deploy more marketing dollars than ever for this year's Derby, and the payback is still projected to be under one year. While this is a drag on 2021 profitability, we will realize the benefits of this spending over the next three to four quarters. Our TwinSpires horse racing business benefited from a 9% increase in handle, primarily because of the timing of Derby week and because the Preakness was run during its typical second quarter timeframe. As Bill mentioned, TwinSpires delivered record handle on the Derby day program as well as the Derby race. Some customers returned to brick-and-mortar properties to wager in the second quarter of 2021. However, we expect that the penetration of online wagering on horse racing will remain elevated from previous years, albeit not at the same level it was at in the second quarter of 2020, when most brick-and-mortar betting options for horse racing were not open due to the COVID-19 pandemic. Regarding sports and online casino, the business generated a loss of $11 million in the quarter due to marketing and promotional activities as we rolled out our rebranded TwinSpires online app in Pennsylvania, Indiana, and Colorado. Now turning to our gaming segment. Because all of our gaming properties were closed for some portion of the second quarter last year, my comments will provide quarterly sequential comparisons and comparisons to the second quarter of 2019 where appropriate to highlight how successful the second quarter of this year was for the gaming segment. We are very pleased with the performance of all of our gaming properties in the second quarter. Our team delivered record net revenue from our wholly-owned casinos and record adjusted EBITDA from our entire gaming portfolio of assets. We were pleased with the 22% sequential growth in net revenue from first quarter 2021 to second quarter 2021 for our wholly-owned casinos. We are also pleased with the 46% increase in adjusted EBITDA and the 3.6 percentage point margin expansion. We have seen continued strong demand and generally disciplined competitive behavior in our markets, a dynamic that has continued into July. Compared to the second quarter of 2019, net revenues increased 5%, adjusted EBITDA increased $44 million or 58%, and our wholly-owned casino property margins expanded by over 10 percentage points. Given our strong cost controls, we believe that our margins will likely remain elevated compared to the prior years for the foreseeable future. We were especially pleased with the performance of Rivers Des Plaines and Miami Valley Gaming, which collectively contributed nearly half of the $122 million of adjusted EBITDA growth for the gaming segment, compared to the prior year quarter, and more than half of the $44 million of adjusted EBITDA growth compared to the second quarter of 2019. Both delivered record net revenue, adjusted EBITDA, and margins, as well as significant margin expansion compared to the same quarter in 2019. These two properties also distributed a combined $25 million of cash to us in the second quarter as the properties returned to generating significant operating cash flow. We believe the expansion at Rivers Des Plaines and the ongoing growth at all of our gaming properties will fuel our growth and adjusted EBITDA as well as operating cash flow in the coming years. Turning to capital management. Regarding project capital, we have spent approximately $16 million on project capital in the first half of 2021, of which more than half was spent finishing the Oak Grove facility. The balance of the project capital has been spent at Churchill Downs Racetrack and for site preparation at Turfway Park. We anticipate spending $130 -140 million on project capital for the Full Year 2021, of which approximately half is planned for the build-out of the Turfway Park HRM facility and a few ongoing projects at Oak Grove and Newport. The remaining capital spending is primarily for the multi-year capital expansion projects at Churchill Downs Racetrack, as well as the expansion of HRM machines and facility enhancements to capture the HRM opportunity in Louisiana. We have spent approximately $14 million on maintenance capital in the first half of 2021, primarily related to Churchill Downs Racetrack and improvements to our TwinSpires horse racing platform. We now anticipate spending $45 - 55 million for maintenance capital in 2021, which includes $10 million for the new turf course at Churchill Downs Racetrack, new slots and other maintenance improvement projects for our gaming and HRM properties, and ongoing improvements to our TwinSpires horse racing platform. Regarding our debt and leverage positions. At the end of June 2021, we had net leverage of 3.0x, reflecting the substantial improvement in our operating performance that increased our trailing 12 months adjusted EBITDA. The waiver period for both of our revolvers maintenance covenants ended yesterday with our second quarter filing. We were pleased that although we had the waiver in place, we met our revolver covenants through the entire waiver period. We appreciate the support of our bank group during this period of time. We anticipate that our net leverage will continue to decrease over the balance of the year. We have plenty of debt capacity and flexibility given our low leverage and strong operating cash flow to fund the capital investment projects that we have shared today that we believe will create strong earnings growth in the coming years. We are also in the process of monetizing the Arlington real estate and excess land at Calder, which will provide significant cash to reinvest in our business, to pursue strategic acquisitions or to return to our shareholders. As Bill stated, the building blocks that we've put in place to support the ongoing growth of our company are real and tangible. We believe our continued long-term strategic focus on growth, including acquiring quality properties to add to our unique portfolio of assets and investing strategically in our existing properties, along with the thoughtful management of our balance sheet and access to capital, will provide significant growth in adjusted EBITDA and free cash flow in the coming years. All of this will enable us to deliver strong long-term shareholder returns and to continue to return capital to our shareholders in the form of dividends and strategic share repurchases. With that, I'll turn the call back over to Bill so that he can open the call for questions. Bill? Thank you, Marcia. At this point, we'd like to open up the call for questions. Ladies and gentlemen if you have a question at this time please press and the number one key on your touchtone telephone.If you question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question is from Shaun Kelley from Bank of America. Your line is open. Hi. Good morning, everyone. I just wanted to maybe start giving all the capital expansion opportunities, if we could just drill in a little bit further. You guys have given a lot of color about the different projects and the timelines. I'm wondering if you could just talk at a high level about ROIs and a little bit of your expectation for kind of which projects will take a little bit more time to ramp versus which ones are going to be a little bit more of an immediate payback. Sure. Happy to address that. First, when it comes to Churchill Downs Racetrack, we usually target returns in the 6%-8% range. If you want to back into the expected EBITDA that we think when the project reaches maturity, we're really building to multiples that are 5x to 6x to 8x. We've often beaten that with Churchill Downs Racetrack, so that's given us more confidence with projects for the facility. Generally, this group of projects is right in our sweet spot. We really understand the customer demand and the customer feedback with respect to these kind of products, and we really understand the area where these customers will be and have lots of experience modeling what to expect. Generally, when we open a project, and we covered some of the timing. During the initial commentary, the Homestretch Club will be open by next Derby. The first term will be open by the Derby after that, 2023. The Paddock project, which is in the earlier design phase, is targeted to open 2024. Generally, in the first year, the customer doesn't know the product, so it's hard to sell the product based on experience because they haven't had the experience yet. It's a new product. I have to say, having been here a long time and worked on a lot of projects, usually the customer response is better than we really expect, even though there's no one out there to sell it by word of mouth from having actually experienced the hospitality because it hasn't opened yet. Those things said, obviously, word of mouth is an important selling point, so generally the second-year sales and the third-year sales are even better. I'd also, I guess, finish with respect to that question with the observation that these projects for Churchill Downs Racetrack are exactly in our sweet spot. This is exactly what our team is deeply experienced at doing, and these are exactly the kind of projects we've done in the past. We have a fairly good degree of confidence with respect to the construction process, with respect to the sales cycle, and with respect to the EBITDA generation once the project reaches maturity. Great. Maybe just as my follow-up, you gave some color on some of the investments being made in TwinSpires, particularly for the launches of some of the new states as you move to the new branding. Could you just give us a little bit more color on the expectations for that going forward? When do you start to expect to see maybe some lift on the market share front? Is there further investment in marketing that needs to be made after the launch process? Just maybe help us think about investment for the back half, especially going into NFL, and then more importantly, how you expect maybe that to operate over the next two years as you start to gain traction there. Philosophically, we did not want to focus on market share because generally in that market, we haven't been comfortable with what the competitors are paying to acquire customers. Generally, we are not over-incenting our teams to acquire market share and acquire customers because we don't see a lot of that customer acquisition as long-term profitable. For us, we're building it methodically and carefully so that we have the right cost structure and the right DNA for how to run the business. Then as some of the noise that we think is currently in the market settles down, we'll be able to better assess how to best maximize that business for our company. With respect to the upcoming football season, yes, I think we already know enough to say that online sports wagering has cyclicality. It has seasonality to it, and football, college and professional, is a really big part of the seasonality. We think some of our improvements in how we operate that business are going to be a little opaque just because we're heading into the customer acquisition portion of the year. We'll balance those things. In general, we think customer acquisition costs will consume some of our operational improvements as we head into football season. Again, you can trust with our company, we're not acquiring customers unless we think we have a plan to be profitable with respect to those customers over the long term. Thank you very much. Our next question is from David Katz from Jefferies. Your line is open. Hi. Good morning, everyone. Thanks for all the details so far. I wanted to just hone in on one detail, which was, I think at one point we may have expected that there would be HRMs at Churchill Downs Racetrack. I think, Bill, you may have touched on some of the decision not to. Can you elaborate on that just a bit? I'm just curious sort of how those thoughts came together. Sure, David. I'm happy to do that. With the pandemic, like a lot of businesses out there, we reassessed everything. I know there's always a lot of optimism with respect to the future, and we share that too, but we are always thoughtful and careful about our capital investments and about our business planning. When the pandemic hit, we rethought everything, and here are a couple of things we learned. One of them is Derby City Gaming is even more of a juggernaut than we ever thought. Generally in business, it doesn't have to be complicated. When you have something working well, invest more in what's working. Derby City Gaming really powered right through the pandemic, and we need to respect that and invest around that. That was a better property than we ever could have hoped for, and we're going to continue to grow it for the benefit of the company and for the benefit of the horse industry in Kentucky, which also then benefits Churchill. We saw a lot of strength coming out of Derby City Gaming. With respect to the track, a lot of our original plans pre-pandemic with respect to the track were very forward-thinking. It involved new business models around very high-end hotel hospitality. We were very excited about it. With the pandemic, we decided to go back to right now what we really, really know. We really reshuffled some of these projects. It doesn't preclude long-term hospitality at Churchill Downs Racetrack or any project we might have thought about in the past. We wanted to reshuffle the deck and focus on what we know works at Churchill Downs. When it comes to the HRMs, put them where we know it works, which is Derby City Gaming, and take a look at the opportunity that we see coming out of rebuilding downtown. I think as a company, we just did the mature thing, revisited all our projects, reassessed the risk, took what we learned coming out of the pandemic, and reshuffled our deck to focus on what we thought would work best and fastest in the near term. As it stands right now, we don't want to put HRMs at Churchill Downs Racetrack. It's close to Derby City Gaming, and we think it's a better investment for our company to invest in Derby City Gaming, and also with respect to HRMs, and also look downtown. When it comes to Churchill Downs Racetrack, focus on what Churchill Downs Racetrack really is best at, which is monetizing the Kentucky Derby. Understood. I know that you touched on sort of the digital gaming efforts, but I wanted to go back to that just a little bit. I clearly understand the intended strategy not to gain market share and to build profitably. I also understand the notion of building a branded, integrated enterprise in conjunction with your land-based efforts. At the same time, there are other strategies that others have pursued where it's done at a JV or it's done sort of with a separate set of strategy and leadership and so forth. How do you think about those competing issues and the decision to sort of build it within Churchill structurally the way it is versus perhaps having it in a kind of a separate channel or a separate enterprise? Well, first, I'd say that within our digital assets, we have a very successful one by anybody's estimation. It's the most profitable digital asset in the online gaming space, and that's TwinSpires. With respect to how we approach digital, we know what's worked for us, and we want to respect those lessons that we think we've learned being in this business for a long time. At the same time, we study everybody else relentlessly. We constantly are trying to learn from what everybody else is doing and reflect that in our business plans and business processes. I think with respect to the capital structure, the ownership structure, we've seen some of the different structures that are out there that other companies have done, the SPACs or spinoffs or what have you, but I don't really think that's relevant for right now. Right now, it's build a great business. Build a business with the right DNA that's going to be successful long term. I think maybe because we've been in the digital business for a while with horse racing and TwinSpires, maybe that puts more of a longer-term focus. Maybe it causes us to think long term. With deep respect for the significant competitors that are out there that have accomplished all kinds of things, we have to do it the way that we know works for us. For those that have followed our company and invested in us over the long period, I think they have some confidence in us, just like we have confidence in ourselves, that we'll do the right thing with this group of assets. Building it too fast or building it with inappropriate marketing, your capital structure in the end isn't going to fix that. It isn't going to change that, and isn't going to fix that. Our focus as a team is build the asset correctly, and over time, we'll have the best strategy for us for how to maximize its value to Churchill Downs. Okay, I agree. Thanks very much. Our next question is from Jordan Bender from Macquarie. Your line is open. Hey, everyone. Good morning. You've alluded to now growing the HRM base at several of your properties on the call. You have approved 7,000 units in the state of Kentucky between the main facilities and annexes. As we look out over the next several years, do you anticipate reaching those 7,000 units, and will future capital projects be worked towards that? Thanks. We'd be the first to tell you that we don't have a crystal ball, but we always make plans. The thing I think about our company that we can promise you is that we're always revisiting our plans and seeing what the present's teaching us about the future. I don't have any comment on ultimately how many HRM we have in Kentucky or any other place. All I can promise you is that we'll learn from our results. Ultimately, the number of machines you have in Kentucky, unlike some jurisdictions, isn't statutorily driven. You can have as many and you can apply for as many as you need and you want. The regulatory and the legal regime isn't really designed to enforce a fixed a minimum or maximum. We'll right-size the number of machines we use in the jurisdiction based on how things go and in accordance with our expectations on a return on our invested capital. Okay, thank you. You've touched on it quite a bit on the call, but for TwinSpires, can you talk about the conversion that you've seen from the BetAmerica's platform and your horse racing platform onto the sports betting iGaming app in the states that you've launched so far? Thank you. I just want to make sure I give you a good, precise answer. Would you mind just restating that question again? I don't want to answer a question different than the one you asked. Yeah. I'm just looking for kind of the conversion that you've seen from the BetAmerica's platform and your TwinSpires horse racing platform onto the sports betting iGaming app so far. Well, I think over the introduction of lots of states, you'll see the true power of that, taking what are very strong horse racing customers, where really the model is much different than what you see generally in sports wagering. In horse racing, we have very good long-term customers that we know a lot about, versus the online sports wagering world, where we're meeting a lot of new customers and ciphering through and filtering through lots of customers to find good ones. The fact that we have a database across a whole bunch of states of very good gaming customers who have been focused on horse racing is definitely an advantage for our company as we deploy other online products into those states. We're still at a point where we haven't seen a huge number of states that are open and a huge amount of time in the states that are open to really tell the definitive story of what that database will mean. We're in the early days of it, but it's theoretically, it's conceptually, and it's actually an advantage to have this database. That's something that's playing out now and will play out over the next number of years. I don't want to characterize it as a success at this point because we got to go out and prove it, and that's to come in the upcoming quarters and years. Okay. Thank you. Our next question is from Brett Andress from KeyBanc. Your line is open. Hey, good morning. Thanks for taking my questions. On the Derby City expansion, just the thought process on adding a hotel there. I'm just curious how that plays into the future growth of that property and maybe the evolution of the customer base there. Is it really just as simple as a backdoor way to add hotel capacity around the Derby? It's not focused on adding backdoor capacity, as you called it, for the Derby, although certainly that won't hurt, and certainly that can be an advantage. This is a gaming-driven hotel. It's modeled after some of the other things we've done in the company, whether you look at what we've done in Oxford or what we're doing at Oak Grove or what we've experienced in Mississippi with our hotels. It's designed to stretch the market we can reach into, so we can reach customers who are further away, who have farther to travel. With respect to our good customers, it can allow them to stay and play longer at our facility. It is modeled very conservatively, based on a gaming hotel proposition. The fact that it might have some benefits being close to Churchill Downs and the Kentucky Derby is gravy, but this is a straight-up disciplined application of what we've learned from our hotels at our other properties, at our other gaming facilities in the United States. Got it. All right. Can you just talk a little bit about the ramp of Oak Grove? I mean, margins continue to gradually step up there, but is there anything in the back half of 2021 or 2022 that are going on at that property that we can start to see that property close the gap with Derby City? Yes, this is Bill Mudd. We're very pleased with the ramp that we're seeing there. Clearly ahead of where we had planned internally for the investment into that property. As Bill stated, we're still below 15% penetration in the Nashville market. It's about an hour drive from the Nashville market. We're growing that database every day. Very pleased with how it's going. Obviously, the weekends, Friday, Saturday, and Sunday are already at or near where we are, not quite there yet, but we're closing the gap on Derby City on the weekends. It's that early part of the week, we got to figure out how to get more people out of that Nashville market and the demographics that make sense for that Monday through Thursday period. Yeah, there's clearly much more opportunity to ramp that property and the team's doing a great job doing it. All right. Thank you. Our last question is from Joseph Stauff from Susquehanna. Your line is open. Thank you. Good morning, Bill. Good morning, Marcia. Good morning, Bill. Couple questions on TwinSpires, please. I'm wondering if you can maybe provide a little bit more commentary on the result of the added kind of bonusing and marketing spend for user growth on TwinSpires and is there any additional color you can give us? I believe you had said record new player growth. I was wondering if you could maybe provide a little bit more commentary on what you saw. Bill, why don't you go through some of the stats? Yeah, I'd be happy to. Comparing to 2020 in the second quarter is a little bit of a misnomer because everything was shut down in the second quarter of last year. Sure. Of course, the Derby didn't happen in the second quarter of last year. If you compare the number of players that we had actively versus the second quarter of last year, we were up 150%. If you compare it to the third quarter of last year where we ran the Kentucky Derby, we were up 46% versus the number of players that happened in that period. If you go back two years and say, "Well, how do you compare to the second quarter of 2019?" Which remember, was an all-time record number of handle, we were up 15% in terms of players for that period. Whenever you think about horse racing and TwinSpires online, it's much like what you're seeing in online sports betting today. You're taking the expenses in the current period to generate growth in the future. Every year we get one opportunity on an event like the Derby, it's bigger than any other event in horse racing, to deploy large amounts of investment. Every year we keep pushing more into the marketing spend and realize that we keep getting good returns. Every year for the last several years, we've increased marketing spend. This year was bigger than any increase we've seen in a long period of time because we did pull back a little bit last year, and we were successfully being able to deploy that. It was great to see from that perspective. Hopefully, that answers your question. Yeah. That's very helpful. I appreciate that, Bill. As we think about just what you've seen in TwinSpires and ADW in general is obviously huge growth here over the past four quarters, and I was wondering what you've seen thus far, maybe in July, out of the TwinSpires ADW in particular. Has it continued similar to the trend in the second quarter? I know Marcia had some commentary, but I was wondering specifically for how it's trending here thus far in the third quarter. I think in the second quarter, what you saw is we continue to grow TwinSpires, and that was during a period of last year in the second quarter, largely everything was shut down. No one was able to go to a brick-and-mortar wagering facility to place bets on horse racing, be it at a racetrack that was running races because they weren't allowing patrons in or an off-track betting facility. This year you've seen a lot of people start to go back to those facilities, and luckily, that translated to a lot of growth across the industry and handle. The way I would characterize it and the way we think about it is, two things. Are we maintaining people interested in the sport? I think we are. We've seen four quarters in a row of strong growth across the industry. Anywhere from 38%-6%, I think, was last year's fourth quarter. What we're seeing is about half of those people that went online are staying online. There are some people that want to go put their money through the window. We're very happy with where we are. We're growing the entire customer base, and we're also keeping a good percentage of those people that decided to wager online when they could no longer go to brick-and-mortar facilities. Those people that don't are going back to brick-and-mortar facilities. I think it's a win across all parts of the business. That makes sense. Bill, I was wondering what your thoughts were just with respect to your gaming portfolio and similar to your competitors, you guys have generated huge margin gains and as the world normalizes and you think about what you have to add back in terms of non-gaming amenities or promotions or whatever, what portion of that savings do you think is more permanent than not? Sure. I always want to be careful about what's fact and what's conjecture. What we see right now is not generally tremendous pressure from our competitors to have to restore amenities and excess cost. I think the industry, in my opinion, the industry's learned something through this, and the industry's become more focused on margins and the industry was forced to adapt to the circumstances we were in and that we continue to be in with access to workers. We all got to test a lot of assumptions about how to best operate a casino and what the target margins ought to be. I think there's been some learning for our company and some learning for others that I hope will sustain itself over time. Right now, what we see makes us have a lot of confidence that we can maintain our margins into the foreseeable future. I feel pretty good about that, but that's what I know. Right now, we don't see any pressure on margins. For the foreseeable future, we think we're going to be operating under a similar paradigm to what we operate in now, and we'll keep reevaluating that every quarter. We certainly think this is a better way to run casinos, and we hope competitors see that too. We'll all get a chance to measure that over time. We clearly, as a company, are very focused on margins. We are very focused on efficiency, and we like the general trend that our facilities have been able to go on, and really, we think that's been good for the industry as a whole to follow a similar projection. Thanks very much. I am showing no further questions at this time. I would now like to turn the conference back to Mr. Bill Carstanjen. Thank you. I want to thank you all for your interest in our company and your investment in our company. I look forward to seeing you all in person when the opportunity affords itself. In the meantime, we're going to keep doing what we do. We appreciate your confidence in us and your guidance. We're going to go out and execute on these initiatives that we laid out in front of us today. Thank you very much. Enjoy the weekend. Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.